Vodafone and banks drag on FTSE

By Michael Taylor

LONDON (Reuters) - The top share index snapped a three-day winning run on Tuesday as banking stocks fell on persistent economic concerns and Vodafone (VOD.L) and Enterprise Inns (ETI.L) lost ground after trading updates.

The commodity-heavy FTSE 100 .FTSE ended down 40.2 points, or 0.7 percent at 5,364.1, after earlier falling to 5,282.8. The benchmark index has fallen nearly 17 percent this year to date.

Vodafone topped the FTSE 100 decliners by slipping 13.6 percent to its lowest close since October 2006.

The stock shaved 44 points off the index after Vodafone cut its revenue outlook as tougher economic conditions forced consumers to hold back from buying and using new handsets.

The company, the world's largest mobile phone firm by revenue, said full-year revenue was expected to be around the bottom of its previously stated range.

"A disappointing trading statement from Vodafone, which although arguably offers a recession-proof service, does cast doubts upon the near-term prospects of the telecom sector," said Andrew Turnbull, director at Blue Index CFDs.

"Our clients have been advised to remain net short of the market as the prospect of any lasting rally is unlikely, considering the number of negative factors present in the market," he said.

Banking shares fell again after recovering in the previous session on initial reaction to results from Bank of America (BAC.N), as investors remained concerned about further writedowns and the sector's ability to raise more capital.